Technology Transfer in Malaysia: Challenges, Opportunities and

Successful Casesby

Dr. Kamariah IsmailDeputy Director (Commercialisation)

Innovation and Commercialisation Centre, UTM

Tel 06 075591503Email: kamariah@icc.utm.my

Outline presentation

• Background of Malaysian universities

• UTM case study technology transfer

Background

• Malaysia GDP growth target of 6% per annum

under 10MP (2011-2015) which expected be driven by private sector investments to grow by

12.8% per annum (compared to 11.2% per annum under 9MP).

• R & D & C spending increase rapidly as other countries as will explain in the next slide.

Background

1. 2010-Malaysia has announced New Economic Transformation Program. Increase income from USD6,700 or RM23,700 in 2009 to more than USD15,000 or RM48,000 in 2020.

2. Innovation is the drivers for the nation wealth creation.3. Government has Announced 2012 as Malaysia innovation

year.4. RM100 million allocation, to encourage innovation ion and

commercialisation among young Malaysian to promote the development of new ideas and commercialisation of innovative products.

Cont.6. An initial allocation of RM30 million will be set up by the

Malaysian Technology Development Corporation and the Malaysia Innovation Agency.

7. 300 intellectual properties on these new products and technologies, will be opened to the private sector for commercialisation.

8. At the same time, a RM500 million shariah-compliant Commercialisation Innovation Fund will be set up to encourage more SMEs to commercialise research products.

9. MyCreative Venture Capital with an initial fund of RM200million will be established to support the creation of new ideas by local institutions.

10. Industrial design services will now be eligible for tax incentive in the form of Pioneer Status with income tax exemption of 70% for five years.

Agency Innovation Malaysia(AIM)

Objectives: amongst others:(a) to formulate national policies, strategies and directions relating to innovation;

(b)to organize, co-operate in and coordinate the performance of activities with the public and private sector to stimulate innovation in Malaysia and commercialisation ; (c) to conduct inquiries, survey and analysis of data, research and development relating to innovation and the national innovation eco-system;

(d) to promote and facilitate investment activities and initiatives

by the public and private sector in relation to innovation;

Universities In Malaysia

• Total 20 public universities in Malaysia

- 5 research universities: UTM, UPM, UM, UKM, and USM.

- 15 Non Research universities; new universities.

• 23 Private universities

• Total 43 universities in Malaysia

Number of Patents Granted in Malaysian Universities (public and private Universities.

Source: MyIPO 2011

Years Number of patents granted

2005 1

2006 10

2007 34

2008 22

2009 47

2010 44

2011 85

Innovation & Comercialisation Centre (ICC)

Universiti Teknologi Malaysia(UTM)

• Was established in 1894 and became a leading university in engineering and science in Malaysia.

• 16,000 undergraduate and 10,000 postgraduate students.

• University’s mission is focused on the development of innovative and creative mind towards entrepreneurial university.

• Has more than 2400 IPs.

• Recently has developed Technology Transfer office called Innovation and Commercialisation Centre (ICC) to facilitate commercialisation activities.

VisionTo be an efficient one stop management centre for technology innovation and commercialisation.MissionTo assist in UTM’s IP management and exploitation, to add value to the technologies towards achieving innovative and commercially viable products, that meet market needs for the nation‘s wealth creation.StrategiesTo achieve these, ICC shall work strategically with the Faculties, Research Alliances and Centres of Excellence in tandem with relevantr government agencies and industries in promoting UTM’s technologies.

Innovation & Commercialisation Centre (ICC)

Objectives of ICC

To help UTM inventors, innovators and entrepreneurs make their ideas more commercially successful through networking with industry and affiliate partners.

To help UTM inventors, innovators and entrepreneurs to commercialize their ideas via spin-off formations/start-ups, joint ventures and partnerships.

To help UTM inventors, innovators and entrepreneurs commercialize their ideas for the benefit of society, Malaysian economy, the inventors and the University.

ICC’s Commitment:-Help UTM’s researchers add value to their technologies and promoting innovative and commercially viable products

Representing UTM in promoting, marketing, business matching and collaborating with industry

Manage licensing or assignments of UTM’s technologies; and

Assists UTM’s researchers in the formation of spin-off companies, or joint ventures

ICC Organization Chart

ICC and UTM HOLDINGSICC and UTM HOLDINGS

DIRECTOR

Deputy DirectorCommercialisation

Office

SUPPORTSERVICES

IP Management

•IP Acquisition•IP

management•IP Exploitation

IP Management

•IP Acquisition•IP

management•IP Exploitation

Deputy Director

Innovation Office

Promotion & Exhibition UnitPromotion &

Exhibition Unit

Innovation Point Unit•I-Aware Programme

•I-Act Programme•I-Fund

Innovation Point Unit•I-Aware Programme

•I-Act Programme•I-Fund

Innovation Prototype Development Unit

•I-Proto Programme•I-PDTL Programme

Innovation Prototype Development Unit

•I-Proto Programme•I-PDTL Programme

Innovation Idea Incubation Unit

•I-Incu Programme•UTM-MTDC Symbiosis

& Incubator Programme

Innovation Idea Incubation Unit

•I-Incu Programme•UTM-MTDC Symbiosis

& Incubator Programme

ACCOUNTS AND FINANCE

LEGAL & CORPORATE

AFFAIRS

ASSOCIATE COMPANY

INVESTMENT

COMPANY

SUBSIDIARIES COMPANY

CommercializationConsultancy

Project ManagementTraining

Facilities Management

UTM BUSINESS

ENTITY

INVESTMENT COMPANY

BODUTM HOLDINGS SDN. BHD.

CEO(GROUP OF COMPANIES)

U-SHOP

PHYTO BIZNET

SPARKLE GTIM

AISB KAEC

MET S/BUNI-IT

BUSINESS DEVELOPMENT

AdministrationLegal

Human ResourceCorporate

Business Development Coaching &

Training Unit

Business Development Coaching &

Training Unit

Negotiated

INNOCOMM COMMITTEEINNOCOMM COMMITTEE

COMMERCIALISATIONCOMMERCIALISATION

LICENSINGLICENSING

NON-EXCLUSIVENON-EXCLUSIVE EXCLUSIVEEXCLUSIVE SOLE LICENSINGSOLE LICENSING

SPIN OFFSPIN OFF THIRD PARTYTHIRD PARTY

MODE 1Major UTMMinor Inventor/ Investor

MODE 2Minor UTMMajor Inventor/ Investor

<2 years – selling shares to the remaining share holders

INNOVATION POINTINNOVATION POINT

IP PROTECTIONIP PROTECTION

Capture all potential products/services that have commercial value Awareness program / Joint Problem Definition with Industry Patent Search & Scoring System

CRITERIA

Novelty Commercial Value Recommendation From Scoring System Tool Readiness To Commercialisation Potential Industrial Partners Strategy For Commercialisation Award Winners (At least Gold / Silver)

COMM TRACK

•Commercialisation• Marketing• Promotion• Exhibition• NDA, MOA/MOU• Technology Licensing

RARMCFACULTY

ICC

IDEA BANKIDEA BANK

OUT RIGHT SALES / ASSIGNMENTOUT RIGHT SALES / ASSIGNMENT

3-5 years – sell off stake to the other remaining share holders or sell share to another external party5-10 years – sell off stake to the other share holders or to another external party

EXIT STRATEGY

INPUT

INNOVATION IDEA INCUBATION

INNOVATION IDEA INCUBATION

INNOVATION PROTOTYPE

DEVELOPMENT

INNOVATION PROTOTYPE

DEVELOPMENT

• Business Plan Market Validation Innovation Funding Innovation Plan (SRI) UTM-MTDC Symbiosis

Lab Prototype / Exhibition Prototype Prototype Testing / Validation Prototype Design Certification Packaging

INNO TRACK

Innovation by adding value to products before it is ready for commercialisation

IP PROTECTIONIP PROTECTION

YESNO

YES

ICC WORKFLOW

UTM’s IP Management Background

Intellectual Property Policy has been approved by the University Senate on 2nd March 1999 and subsequently endorsed by the University Board of Directors in 1st April 1999.

Amendment will be done in line with the National IP Policy 2007 and Intellectual Property Commercialisation Policy (MOSTI) 2009.

UTM IP Committees established and effective from year 2000

UTM was awarded with National Intellectual Property Award for year 2006, 2009 & 2010

ICC is ISO 9001 version 2008 certified on the Innovation and Commercialisation Management including IP Management

More than RM3 mill is allocated for IP management and awareness program per year.

Achievements

Achievements

Awards 2010International Awards

1 Best of the Best Award, 3 The Best Awards,10 Gold Medals, 25 Silver Medals, 17 Bronze Medals - Malaysia Technology Expo (MTE)1 Gold Medals, 4 Silver Medals - International Invention, Innovation, Industrial Design And Technology Exhibition (ITEX)1 Gold Medals, 1 Silver Medals, 1 Bronze Medals - Malaysia Biotechnology Exhibition

National Awards

2 Gold Medals & Double Gold Special Award - British Invention Show (BIS) 1 Silver & 1 Bronze Medal - International Invention Fair of Middle East -(IIFME)

Aerospace/automotive/marine Products/processes related to biotechnologyConsumer Product/ServicesElectrical, electronics & wireless communicationHealth & Bio-medical productsConstruction technologyMarine & offshore structuresChemical, cosmetics & pharmaceutical Materials – metal and non-metalRenewable Energy Processed MaterialsICTs

AREAS OF UNIVERSITY-INDUSTRYCOLLABORATION DISCIPLINARIES

CommercialisationProduct Commercialised

22 biotechnology-based products from Chemical Engineering Pilot Plant (CEPP) licensed to UTM’s Spin-off Co. Phytho Biznet Sdn. Bhd.;Biotech products (5% royalty from gross sales)

10 IPs licensed to 10 Spin-off Companies under the UTM-MTDC Symbiosis Program (RM20million :USD-5,714,286 )

Silica Aerogel (Maerogel; nano technology) licensed to Gelanggang Kencana Sdn. Bhd. – RM 140,000 licensing fee over 5 years licensing period.

Fast Track Wall System licensed to MYA Hitech Sdn. Bhd. – RM1,205,000 (Licensing fee + royalty of RM700/house completion)

Pre-Commercialization

Pre Commercialisation Grant (2010)

Sime Darby Sdn. Bhd. – RM377,600 for the ‘Development of Membrane and Membrane System for Single-Step Process for Degumming and Deacidification of Crude Palm Oil’

Persatuan Orang-orang Cacat Penglihatan Islam Malaysia (PERTIS) – RM 2,216,000 for the development of 'Electronic Braille Al-Quran Teaching Aid'

Symbiosis Program : UTM and MTDC 10 spin-off companies were formed under symbiosis program (UTM and MTDC). Secured funding RM20m

1.Antenna Array at 2.4 GhZ for Point-to-Point Communication 2.Frequency (RF) Front-end System for Wireless Local Area Network Point-to-Point Link 3.Microclear for the Treatment of Coloured Wastewater4.Pineapple Fiber-based Product Development for Nutraceuticals/food fiber 5.An Active Packaging Using Smart Bio Switch Concept6.3D-based Surveillance System 7.Development of Pre-treatment System for RO Drinking Water Production8.Nanocrystalline Ni Plating Directly on Aluminium , High Speed Electroforming 9.Novel Low Cost Ultrasound Sonoimprometer10.Energy Saving in Building Air Condition System

Spin-off definitionMany definitions and not consistent. •OECD (2001) defined a university spin-offs as a company having one of the following characteristics:

• Any new firm which includes a public sector or university employee as a founder.

• Any new firm which licences technology from a university or public research institution.

• Any new firm in which a university or national laboratory has taken up equity investment.

•the intellectual property of the university is formally transferred to the start-up firms (Shane, 2004; Pirnay et al., 2003; Lockett et al., 2005).

UTM Spin-off DefinitionA spin-off is •a company that exploiting a university or research institution intellectual property. The university or research institution may or may not own equity in the company. However, the royalty (running royalty and upfront fees) will be charged by the parent organisation due to exploiting the IP rights based on the negotiation.

UTM Commercialisation Routes 1. Traditional licensing: License to

established companies (UTM may receives upfront payment and royalties).

2. Create a spin-off (will discuss afterwards)1. Spin-off type A (UTM has equity and receives royalties)2. Spin-off type B ( UTM will receive only royalties).3. Joint ventures.

Why two types of spin-offs

Advantages Disadvantages1 High profit if the company has good

return especially during the exit period

UTM only takes equity, if the University think the company will make profits.

2 UTM has to be one of the BOD. Liability to UTM if the company is operating at a loss.

3 Need to create surrogate entrepreneurs to run the company

High risk to UTM

1. Spin-off with equity (license UTM’s IPs to UTM researchers or JV)

Definition Continued:2. Spin-off without equity (license UTM’s IPs to UTM researchers/JV).

T

Advantages Disadvantages

1. UTM does not required to be BOD

UTM has no right to control the company

2. The management of the company will manage by the company’s BOD

UTM will not get return during the exit period.

3. No liability UTM only relies on standing royalties

4. No risk5. The Company must appoint the

CEO (UTM staff is not allowed to

Ownership of IPs Royalties and equity rates

• Owned by UTM • Based on the negotiation

• If the technology is based on joint research , joint ownership will be applied, which based on the negotiation.

• The portion of ownership will be based on the contribution of each party.

• If UTM invests in the company and willing to take equity, UTM has right to request the rate of equity but limited to the maximum of 51% of equity ( as agreed by MOHE during the last meeting).

UTM supports

UTM IP and commercialisation:The success Factors:

1.Supports from top management with the right strategies.2.Clear IPR and commercialisation policy3.Incentive given for patent and publish papers in high impact journals (RM1000 for patent filing and proposed RM5000 for granted patent).4.Encourage commercialisation and entrepreneurial activities among researchers (SRI) and students ( SCI and SCE).

Spin-off/joint venture equity sharing- Give incentives to inventors•UTM –MTDC symbiosis

-40% (UTM), 30% (inventor) and 30% CEOs

•Other Spin-off s and JVs- based on negotiation – case by case basis

No. Gross sales Inventors University

1 First RM 100,000.00 90% 10%

2 From RM 100,001.00 to RM 1,000,000.00 80% 20%

3 From RM 1,000,001.00 to RM 2.500.000,00 60% 40%

4 From RM 2,500,001.00 and above 50% 50%

- Incentive on Royalty sharing

Problems and Recommendation to encourage UTM spin-off to the government of Malaysia1.UTM staff is allowed to be a CEO/CTO to his/her own company. Studies showed that academic inventors more successful than surrogate entrepreneurs in managing the technology development.

2.Every universities has a special venture fund. The Fund must initiated by the government. Part of commercialisation profit will give back to this fund to form another spin-offs.

3.Allow academic-entrepreneurs to take paid leave to involve in the company. They are also allow to return back to UTM if the business failed.

Recommendation Contd:

1. Creates ‘ready made’ CEOs to run spin-offs.2.This could be done through special program to create technology entrepreneurs through entrepreneurship and commercialisation workshop/ University subject especially for post graduate students.3.University Entrepreneurship Centre and universities ICCs/ Management faculty are suggested to lead the workshop.4. Network with industry need to be done by researchers to tap

knowledge on applied research that lead to commercialisation.5. MOHE needs to have a mechanism/give incentive to encourage industries work with universities.6.Give incentives to TTOs/ICC managers who involve in commercialisation/market the technologies. 7.Debt financing is made available by the government through the commercial banks.